Important And Effective Points for First-Time Investors

Here’s a fact! Disciplined investing has the potential to turn small sums of invested money into a big corpus. If you’re a first-time investor starting your investment journey, here are a few key points to keep in mind while making your investing decisions.

Map out a financial plan

To start investing, you must have a well chalked-out financial plan. Jot down your salary, plans, and expenses and develop a unique financial plan as per your spending pattern and needs. Your plan should cover your present financial standing, any financial goals you might have, how to implement the plan.

You must know exactly how much you can invest and where you can cut corners. List down your sources of income, such as your salary, incentives, bonuses, interest from recurring and fixed deposits, and other income sources. Sit with your bank statements to look at your expenses, including rent, utility bill payments, groceries, EMIs, and other fixed monthly payments.

Invest according to your financial goals

Having a clear-cut investment plan is a must for successful investing. Preferably, your investments should be pegged to your mid, short, and long-term goals. Let’s say you want to buy a house in 7-10 years. Your investment objective will then be to accumulate a corpus for your first down payment fund. Or, you might be investing in building your retirement corpus, a goal that is 25-30 years away. This will require a sizeable amount of returns and hence, risk.

Once you’ve chalked out your financial goals, you will have a clearer idea about your investible amount, investment horizon, and liquidity requirements.

Additional Read: Why are SIPs an Ideal Choice for the First-time Investor?

Choose a suitable investment avenue

There are numerous investment avenues available today, from stocks, mutual funds, real estate funds, gold ETFs, commodities to cryptocurrencies. Hence, spend considerable time understanding various avenues before investing.

Know your risk appetite

It’s common for first-time investors to panic if their initial investments record losses. As such, you must understand your risk-taking capabilities before you start investing. If your risk appetite is high, investing in risky avenues like equity securities or products like small and mid-cap equity funds will be a prudent choice. It’s also advisable to stay invested for longer terms and give your investment considerable time in the market to grow.

Diversify your portfolio

If you try to create an investment portfolio using mutual funds, create a diversified portfolio by investing in different market capitalisations and asset classes. Diversify your investments across varying instruments comprising different asset classes and risk elements, providing different levels of returns. This way, your overall investment portfolio will stay risk under control. You will also accrue consistent and attractive returns aligning with your financial goals.

Additional Read: 5 Questions a first time investor asks

Start investing early

If you start investing early, you give your hard-earned savings enough time to grow into a corpus that powers your financial fitness. You can also get a head start on building your retirement corpus, as your investible funds will benefit from the power of compounding.

Over to you

Now that you are ready to make your investment decisions as a first-time investor choose a new-age, reliable solution for all your investment needs. Download the Tata Capital Moneyfy app today and kick start your goal-based investment journey today!